With myriads of Forex trading strategies, it becomes hard for beginners to get started. The first decision to make is what kind of trading style you prefer. It includes –
- Day trader
- Position trader
- Swing trader
- Blend of different Fx strategies
Each style has its pros and cons. Many traders have wasted money, time, and effort in choosing inappropriate strategies.
Below are some tips for beginner traders to consider before they choose a forex trading style randomly.
Is trading for earning income or growing wealth?
Income means making dollars monthly, while wealth implicates an increasing percentage annually.
- To earn income every month from your trading, it is essential to identify more opportunities in a short time. It means trading at low timeframes and spending hours before your computer screen. For this aim at Fx trading styles like short-term swing, scalping, and day trading.
- To grow your wealth in percentage annually, you can choose a few trading opportunities. You can trade at high timeframes as well as spend less time before the computer screen. Position or swing trading are the styles you can choose.
What is the amount of time you can afford to spend on trading?
For a trader with a full-time job spending 12 hours before the monitor is not affordable, so avoid day trading or scalping styles. You can choose a position or swing trading. Alternatively, if you have time to stay committed to trading then enjoy a short-term trading style.
Does the Fx trading style you chose, suit you?
Majority of the trading style falls under these categories –
- High win frequency with little reward to risk ratio
- Low win frequency with big reward to risk ratio
Both approaches can work concerning profitability as it depends on the percentage of your winning as well as risk to reward proportion. The best answer to this question is, go with the approach you feel comfortable with.
- If you favor high winning frequency but small rewards, then choose the swing trading style.
- If you fancy low winning frequency but huge gains then opt for position trading style.
Tips on how beginners can start their FX trading with a suitable strategy
The first step is to open a Forex demo account on the ADSS brokerage platform. There are many variables to consider and stuff like chart patterns, indicators, Elliot waves, etc. you can get familiar with. You will need to master your readings of support and resistance. The reason is that price fluctuations can –
- Break at the support & resistance
- Reverse at the support & resistance
If you get familiar with support & resistance, then you will be competent as a reversal trader, breakout trader, or trend trader. The great aspect is support & resistance work on different time frames. It does not matter if you are a position trader, swing trader, or a day trader.
- When price breaks at S&R, see the pattern that ensued before the breakout point.
- When price reverses at S&R, see the pattern that happened before reversal.
Study hundreds of charts, you will obtain the sixth sense to identify whether the price will possibly reverse or break at S&R.
With a trading style and committed timeframe clarity, practice on demo accounts devotedly before you move to trade live!